The Case

In September 2022, the Plaintiffs were invited by the Defendants to invest $800,000 in a residential property redevelopment in Syndey’s Inner West. One of the Plaintiffs also agreed to work unpaid for a company associated with the Defendants.

The arrangement was informal: there was no written agreement, no defined management structure and no formal proprietary interest granted to the Plaintiffs. Instead, the venture proceeded largely on mutual trust between friends embarking on a duplex development.

By October 2025, progress had stalled and the relationship had deteriorated. One of the Defendants indicated that the property would be sold and any profits or losses shared equally. The Plaintiffs responded by lodging a caveat over the property and subsequently commenced proceedings.

The dispute became more complicated when a company associated with the Defendants borrowed $1.3 million from a Mortgagee and granted a mortgage over the development property, being the very asset at the centre of the dispute.

Key Issues

The Court considered:

• Whether the informal arrangement between the Plaintiffs and Defendants constituted a fiduciary joint venture despite the absence of a written agreement, joint control or a formal proprietary interest.

• Whether the Defendants breached fiduciary duties by dealing with the property for their own benefit.

• Whether equitable relief should be granted in respect of the mortgage granted over the property.

Findings

The Court found that despite the Plaintiffs having a fixed return, no formal interest in the property, and no joint control, a fiduciary joint venture of quasi-partnership character existed. The informality of the arrangement and the degree of reliance were decisive. The Court found that communications from one of the Defendants amounted to repudiation of the arrangement, which the Plaintiffs accepted by lodging their caveat.

To remedy the breaches of fiduciary duty, the Court declared a constructive trust over the property and ordered that the Plaintiffs receive $1.195 million from the sale proceeds before the Defendants received any return.

Critically, the Court granted a mandatory restorative injunction requiring the Defendants to procure discharge of the Mortgagee's mortgage. The Court found that granting security over joint venture property to secure separate company borrowings was a breach of fiduciary duty.

What This Means for Lenders

• Informality is no shield. Courts will look beyond the absence of written agreements and formal structures to find fiduciary relationships where trust and confidence are reposed. Handshake deals with friends can create enforceable fiduciary obligations.

• Fiduciary duties can survive termination. Even after a joint venture ends, parties cannot deal with joint venture assets for personal benefit. Mortgaging property to defeat a co-venturer’s claim is a breach that equity will remedy.

• Priority matters. Where parties have guaranteed returns, courts will enforce priority payment on winding up, even over secured creditors whose security was granted in breach of fiduciary duty.

• Lenders beware. A $1.3 million mortgage was effectively rendered worthless by the mandatory injunction. Due diligence on a borrower's authority to grant security, and whether the property may be subject to competing equitable interests, is essential.

Wang v Yu confirms that equity's long arm can reach into informal ventures, and that fiduciary duties can trump even registered security interests when those interests are granted in breach.

DISCLAIMER: This article is current as at October 2026. It is general in nature and does not constitute legal advice. Specific advice should be obtained for your particular circumstances.